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Indonesia: Updated Rules for Ride-Sharing Businesses

(Sept. 7, 2016) Indonesia has decided to permit car-hailing businesses that operate through online applications to work in the country, resolving a previous dispute over the business model of the services. The new rules will allow Uber, Grabcar, and Go-Car drivers to be in business once they join a cooperative. (Uber, Grabcar Hit the Road After Ministry Updates Regulation, JAKARTA GLOBE (Aug. 29, 2016).)

Previously the regulations had required the drivers to convert their car ownership rights to corporate-owned public transport companies. However, the Ministry of Cooperatives and Small-Medium Enterprises has released a statement to the effect that assets owned by the members of a cooperative and used as a means of production are not transferred into the cooperative’s jointly held assets. Agnus Muharram, Secretary of that Ministry, noted that the situation for the ride-share drivers is “different than [that of] conventional taxi drivers who are working for a company. … If the taxis are private cars owned by cooperative members, then the cars must remain listed as private properties.” (Id.; Constance Johnson, Indonesia: Dispute over Ride Share Companies to Be Resolved, GLOBAL LEGAL MONITOR (Mar. 22, 2016).)

The Minister of Transportation, Budi Karya Sumadi, speaking on August 26, 2016, said that the decision was “what online taxi groups want … and [the new rules] are part of the efforts to keep the safety, security and comfort of the people.” (Uber, Grabcar Hit the Road After Ministry Updates Regulation, supra.)

The Ministry of Transportation regulation will require that drivers for ride-hailing services obtain special driving licenses and that their cars pass tests on road-worthiness. The motorcycle taxis known as ojeks, some of which also operate through online applications, can continue to operate as they have done to date, a news report stated. (Id.)